Not just oil & gas anymore
First of all, the Central Asian region is no longer a one-industry community. For decades, most of the Caspian’s economy had been dominated by oil and gas exploration and extraction activity. Now that fuel prices have been cut in half since 2014 and have remained relatively low, the region is slowly pivoting away the energy business.
The region, however, can still support new maindeck activities. Lufthansa Cargo has been running a weekly MD-11 freighter through Azerbaijan and Turkmenistan since March, Becker said, noting that all but a few markets in the region are producing positive results. In Azerbaijan, Lufthansa had capacity constraints before the freighter came into the picture. “We had A330 widebody service to Baku in the past, but we shifted to an A320. The freighter addresses the capacity issues,” Becker added.
He said he sees potential for more maindeck capacity into Central Asia, a region that Lufthansa today covers with narrowbody passenger planes, besides weekly freighter service through Tashkent, Uzbekistan, and Almaty, Kazakhstan. “We can possibly do more, potentially in conjunction with other markets,” he said, suggesting that Ashgabat has proven to be an attractive market, at least for imports.
Overall the region’s flows are predominantly inbound. Besides oil-and- gas-related traffic, there are few exports. Personal effects of expatriates who have finished their spell in local oil-and-gas operations constitute a significant part of non-energy-related traffic. Inbound, the spectrum of cargo is slowly expanding. “While oil equipment shipments have dropped due to the decline in oil prices, it still remains the main commodity, but we also see more and more consumer electronics, pharmaceutical products, flowers and other perishables, livestock, cars, fashion goods and luxury items,” reported Cargolux’s Ilhan.
Larry Coyne, CEO of Coyne Airways – which has been one of the Western pioneers in the air cargo business, covering the region, from Afghanistan to Kazakhstan – said that the e-commerce boom is beginning to make itself felt in Central Asia. B2C e-commerce flows into the region are still in their early stages, he said, but this traffic already makes up 10 percent of Coyne’s business into the area and is growing. “I think there will be more when Iran comes on,” he added.